Australia’s Santos posts $1.05 billion loss after GLNG write-down

The GLNG plant on Curtis Island, near Gladstone (Image courtesy of Santos)

Australian LNG operator and stakeholder, Santos reported a full-year net loss of US$1.05 billion, mainly due to the $1.1 billion write-down in the value of its Gladstone liquefied natural gas project.

However, when compared to a $1.95 billion net loss in 2015, the loss narrowed by 46 percent last year.

Santos also slashed its net debt by 26 percent to $3.5 billion in the 12 months to December 31 and has flagged the prospect of resuming dividends in 2017.

To remind, Santos has last year announced a new strategy and revealed a plan in December that involves selling off its non-core assets as it is aiming to cut net debt by $1.5 billion within three years.

Santos CEO Kevin Gallagher said the new strategy was paying off despite the GLNG impairment and lower oil prices compared to the prior year.

“As a result our turnaround strategy is starting to deliver. In 2016, Santos was free cash flow positive at $36.50 per barrel and generated $370 million in free cash flow over the last eight months of the year. This is pleasing progress but there is still more to be done,” said Gallagher.

Santos’ underlying profit, which takes out the impact of significant items, increased 29 percent to $63 million.

“At the heart of our strategy is portfolio simplification and focussed growth across five core, long-life natural gas assets: Cooper Basin, GLNG, PNG, Northern Australia, and Western Australia Gas. Each asset has significant upside potential,” said Gallagher.

“In 2017, we will further refine our operating model to drive costs down, improve cash flow and reduce debt. We now have the strategy, assets, people and growth options to deliver on our future success and provide sustainable shareholder value,” he added.

Santos said production and sales volume guidance for this year remained unchanged at 55-60 million barrels of oil equivalent (mmboe) and 73-80 mmboe, respectively.

Worth mentioning, Santos in January announced record LNG sales for the full-year 2016.

The company’s LNG sales volumes rose 89 percent year-on-year to 2.8 million tonnes due to the ramp up of GLNG and strong performance at PNG LNG and Darwin LNG.


LNG World News Staff

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